Online Video About To Implode?
By Anna Johnson on July 25th, 2008You’ve probably heard Internet marketers and consumers alike rave about online video.
Internet marketers because they have been enjoying the benefits of higher conversions from showing videos, along with the viral effect of having their videos seen and shared on sites such as YouTube.
Consumers because they enjoy being able to view video and download content from the Internet.
But the companies hosting much of that video content are, frankly, struggling to make a buck. Well, enough of a buck, anyway.
Witness the following:
- Investors have poured an estimated $8 billion into U.S. online video companies – including Google’s $1.65 billion purchase of YouTube and several smaller deals such as Sony’s acquisition of Grouper/Crackle for $65 million.
- Yet YouTube, which commands a greater than 50 percent share of all video views, will generate just $200 million in ad sales in 2008, and none of the online video companies is profitable.
- And according to YouTube’s own sales manager, Brian Cusack, it has only been able to sell ads against less than 3 percent of the total videos on the YouTube site.
Will the industry implode? Don’t bet on it. While it may take some trial and error before online video companies work out a viable business model – and some companies WILL implode in the process – online video is here to stay.
And that’s because of all those marketers and, more importantly, all those CONSUMERS who love online video. That’s a hungry market folks. The web video companies just need to work out how to feed ‘em without starving in the process.
Sources: Michael Learmonth, “The Cost Of Online Video: $8 Billion And Counting”, Silicon Alley Insider, July 11, 2008, Michael Learmonth, “Is The Web Video Bubble Bursting This Year? Or In 2009?”, Silicon Alley Insider, July 23, 2008, Michael Learmonth, “YouTube Exec: We’re Selling Ads Against ‘Less Than 3%’ Of Our Videos”, Silicon Alley Insider, July 22, 2008
